If you were actively trading the markets today – well, you were
probably falling asleep. It was like watching paint dry. The S&P 500
index traded in an 8-point range for the session, drifting from
positive to negative without conviction.

Including today, we’ve had 98
trading days this year. On 20 of these days, the S&P moved 0.1% or
less. That’s just over 20% of the time. In the prior 10 years, there was
a total of 2517 trading days. And the S&P had a total of 288 moves
of 0.1% or less. That’s just over 11% of the time. There has been plenty
of volatility but it has been interspersed with indecision.

John Williams,
president of the Federal Reserve Bank of San Francisco, said Sunday the
presidential election wouldn’t prevent the central bank from raising
interest rates later this year. Mr. Williams has said that he favors
raising rates two or three times this year.

St. Louis Fed President
James Bullard said today that the strength of the U.S. labor market,
inflation levels that are closer to the Federal Reserve’s target of 2%
and easing international pressures are three factors that support the
Federal Open Market Committee’s aim for a slow normalization of interest
rates. According to FOMC member and Boston Fed President Eric Rosengren
the U.S. is on the verge of meeting most of the economic conditions the
Fed has set to increase interest rates next month.

The market is trying to digest last week’s Fed minutes and the
jawboning from policymakers. Everyone will be following the economic
data closely over the next 3 weeks. Meanwhile, the bond market has done
some of the work for the Fed; since last Wednesday’s release of FOMC
minutes yields have jumped, but the Fed can’t just talk about raising
rates and then fail to do the deed without a severe loss of credibility.

Bayer has confirmed its offer
to acquire Monsanto with a $122 per share all-cash bid that values the
U.S. agribusiness at $62 billion. The drug and chemicals giant
anticipates annual earnings contributions from synergies of around $1.5
billion after three years, and said it would finance the deal through a
combination of debt and equity.

Bayer said a deal would boost earnings
per share by a “mid-single-digit percentage” in the first full year
after completion, and by more than 10 percent thereafter. Bayer would
likely abandon the Monsanto name following the purchase, which would
help distance Bayer from Monsanto’s link to genetically modified foods.

The kind of genetically modified seeds that Monsanto started to sell
two decades ago now account for the majority of corn and soybeans grown
in the US. But that doesn’t mean you want to bet the farm on GMOs. In
the United States organic food sales have grown steadily at around 10 percent a year since
the Great Recession (and at higher rates before that), which puts the
stock market to shame.

In 2015 organic product sales revenue grew 11
percent, while the rest of the food market grew at a rate of 3 percent,
according to the Organic Trade Association’s annual survey of the industry. Total sales reached $43.3 billion, which makes the organic industry a force to be reckoned with. For comparison, Monsanto brought in just under $15 billion in revenue last year.

Anthem and Cigna are quarreling and could delay their merger. The
Wall Street Journal reported that disagreements could delay antitrust
approvals, which would make the $48 billion deal possible. The report
said the two health insurers accused each other of violating the terms
of their agreement announced last July. A deal would create America’s
largest health insurer by members.

Tribune Publishing rejected Gannett’s latest $864 million takeover offer, saying
the$15 per share in cash was inadequate, and they have a turnaround
plan in place. Tribune Publishing, the owner of the Los Angeles Times
and the Chicago Tribune, said billionaire Patrick Soon-Shiong invested
$70 million in the company, becoming its second largest shareholder.
Still, Tribune said it had invited Gannett to an agreement under which
the companies could engage in discussions to see whether a transaction
was in the best interests of Tribune and Gannett shareholders.

Ares Capital Corp,
an investment and finance company focused on mid-sized firms, is buying
smaller rival American Capital Ltd in a cash-and-stock deal valued at
$3.4 billion to better fill the credit gap created as big banks turn
cautious. The deal, which does not include American Capital’s mortgage
management unit, comes about five months after American Capital said it
would solicit offers. Ares is the biggest BDC, or Business Development
Company, in the United States by assets while American Capital, in
addition to operating as a BDC, has a large asset management business.

Due to the U.S. crackdown on tax inversions,
CF Industries is calling off an $8 billion deal to acquire several
European and North American operations from OCI of the Netherlands. The
two said that they were unable to restructure the acquisition, which
would have created the world’s largest publicly traded nitrogen company,
in a way that would be attractive to their shareholders.

Sixteen of the world’s largest banks
must face antitrust lawsuits accusing them of harming investors who
bought securities tied to Libor by rigging the interest-rate benchmark, a
ruling that an appeals court warned could devastate them.

The appellate judges reversed a lower-court ruling on one issue,
whether the investors had adequately claimed in their complaints to have
been harmed, while sending the cases back for the judge to consider
another issue: whether the plaintiffs are the proper parties to sue, in
part because their claims, if successful, provide for triple damages
that could overwhelm the banks.

About a dozen firms have paid almost $9
billion in fines to resolve government investigations around the world
into rigging of the key benchmark. The ruling by a three-judge panel
opens the possibility the banks may have to pay billions more. Libor, or
the London Interbank Offered Rate, underpins hundreds of trillions of
dollars of transactions and is used to set rates on credit cards,
student loans and mortgages. It is calculated based on submissions by
banks.

In their lawsuits, the plaintiffs claim that beginning in 2007 the
banks colluded to depress the Libor rate to minimize the amount they had
to pay out on investments linked to the benchmark. The Libor-tied
investments included asset swaps, collateralized debt obligations and
forward rate agreements. The appeals court overturned a 2013 ruling
which said the investors had failed to show that they were harmed in a
way that would permit them to sue under U.S. antitrust law. Last year,
the U.S. Supreme Court permitted the bondholders to appeal the dismissal of their antitrust claim.

The Second Circuit reinstated the lawsuit today, ruling that the
alleged horizontal price-fixing constitutes an antitrust violation,
basically the district judge got it wrong by adopting a categorical rule
that because the banks were cooperating in setting Libor they could not
be violating antitrust rules. That argument is that since banks operate
as both borrower and lender in Libor transactions, any conspiracy to
gain as a borrower would be offset by losses as a lender. However, there
might be another argument: that the banks suppressed Libor during the
financial crisis to boost earnings or make their finances appear
healthier.

The New York-based appeals court remanded the case so that the lower
court could reach the second component of standing for asserting an
antitrust injury – whether the bondholders are efficient enforcers of
antitrust law; in other words, the lower court could dismiss the case
again, for new reasons.

Greece’s parliament has approved a
raft of fresh taxes and austerity measures needed to unlock further
rescue loans, as the country’s most influential creditors – Germany and
the IMF – remain deadlocked over debt relief. “Greeks have already paid a
lot, but this is probably the first time that the possibility of these
sacrifices being the last is so evident,” Prime Minister Alexis Tsipras
told lawmakers. Athens hopes the measures will bolster sentiment ahead
of tomorrow’s key Eurozone finance ministers meeting.

Holders of bonds from Puerto Rico’s Government
Development Bank are suing to challenge aspects of a debt-moratorium
law that island officials say is crucial to maintaining essential
services. The federal lawsuit names Puerto Rico’s Governor and Treasury
Secretary as well as an unidentified bank receiver. It argues that
amendments give preferential treatment to local creditors at the expense
of others in violation of American and Puerto Rican law.

The U.S. will fully lift the decades long ban on sales of lethal arms to Vietnam.
Speaking in Hanoi, President Obama said lifting the arms embargo would
remove one of the last vestiges of the Cold War, it also opens up
non-military markets. Vietnam’s VietJet has agreed to order 100 Boeing
737 MAX 200 airplanes, in a deal worth $11.3 billion based on list
prices. Delivery of the planes will run for four years beginning in
2019, and will make the airline one of the fastest growing low-cost
carriers in the region.

More than 38 million Americans—the
most since 2005—are expected to travel during this year’s Memorial Day
holiday period, May 26 through Monday, May 30 – and about 90% are
expected to drive. AAA reports gasoline prices are the lowest they’ve
been this time of year since 2005. The national average price is $2.26
for a gallon of gasoline; that’s up significantly from the $1.70 a
gallon that regular grade gas hit in February but down 40-cents from the
average price last Memorial Day. Prices are expected to inch higher
over the next few days, heading into the holiday. Meanwhile, truckers
will pay about 50-cents per gallon less for diesel versus last year.

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